The Congressional Budget Office has spoken. Starvation politics and policies hurt the economy. But the starve-the-beast partisans (and Blue Dogs) are still at it trying to carve out greater austerity, which will be costly and hurtful to most Americans.
Slow growth reflects a combination of ongoing improvement in underlying economic factors and fiscal tightening that has already begun or is scheduled to occur — including the expiration of a 2 percentage-point cut in the Social Security payroll tax, an increase in tax rates on income above certain thresholds, and scheduled automatic reductions in federal spending. That subdued economic growth will limit businesses’ need to hire additional workers, thereby causing the unemployment rate to stay near 8 percent this year, CBO projects.
Economists such as Joseph Stiglitz, Paul Krugman, and Robert Reich have been warning that this was the case. So too have 350 others last fall.
Few argue that the debt is unimportant or that deficits don’t matter at all. But waiting till the economy includes more jobs would solve part of the deficit by itself, thus reducing some of the need for cuts in the first place. Why not wait to put first things first? Heck, not even the king of austerity Peter Peterson apparently believes that austerity timed during a recovery is a good idea. So why are all his minions out in force chanting budget cuts when we still need jobs?
Might we not also point out that the President has also shrunk the deficit, but at a great cost (see the link in the first paragraph). Building the job sector would enable people to recover from the misdeeds of the enabling politicians, the financial sector and the corporate sector, which crashed the economy in the first place. And it would also provide a context in which surpluses could finally be grown and the debt paid down. What’s the chance of the GOP or our beleaguered and bullied president waiting for a more auspicious time? Zero.
Yesterday the President put Social Security and medicare back on the table in a misguided effort at “compromise,” now redefined to mean the American people get trashed again. Today’s seniors on average were hammered by the recession with no or little time to recover. Near-zero interest rates punish seniors, many of whom who cannot entrust what little they have in the stock market. This assures that most cannot keep up with inflation. Medical care soars and costs more than Medicare will pay. Property taxes strain the average senior’s ability to afford his or her home. The current COLA underestimates inflation. Yet the President thinks cutting COLAs (or worse) is a good thing?